JP Morgan Chase 2013 Annual Report Download - page 36

34
Another thing we worked on in
2013 is how to take problems we
find in one area of the firm and
determine whether there are any
similar risks in another part of the
firm. We created a state-of-the-art
controls room in our executive head-
quarters to maintain a repository of
firmwide control-related information
and to enable rapid access to relevant
data, reporting capabilities, sophisti-
cated analytics and more proactive
issue identification.
We have made substantial progress
in AML
We also are deploying unprece-
dented resources, dedicating senior
managerial time and prioritizing
eorts to build and maintain an
industry-leading AML program. By
the end of 2014, we will have dedi-
cated close to 8,000 full-time employ-
ees solely to AML. We are making
progress in strengthening our ability
to measure AML risk, are improving
how we onboard clients and perform
customer due diligence, and are
enhancing how we monitor client
transactions to detect potentially sus-
picious activity. At the same time, we
have taken substantial steps to de-
risk, or simplify, our businesses. We
have exited more than 500 relation-
ships with foreign correspondent
banks and are moving any accounts
for foreign government ocials/
politically exposed persons out of
Consumer Banking.
We want to make sure we have nothing
but open and honest dialogues with
our regulators
We have hundreds of regulators
around the globe and are examined
extensively each year. We also have
thousands of documents and data
points we periodically share with
them. It is imperative that we are
fully transparent with our regulators
at every level of our organization.
rising rate environment. The average
yield of our investment securities
portfolio increased by more than
50 basis points from 4Q 2012 to 4Q
2013, reflecting our ability to deploy
new investments at higher yields
throughout the year.
We have put enormous resources on
the control and compliance agenda
We have developed and implemented
an end-to-end control and compliance
agenda, central to which is early issue
identification and escalation and
sustainable remediation. Over the
course of 2013 and 2014, we will have
increased our total spend on that
agenda by approximately $2 billion.
We are looking at issues on a firmwide
basis
One of the things we focused on last
year is a series of firmwide reviews
– issues raised by our regulators and
issues we identified internally – that
we thought should be examined on
an enterprise-wide basis. We stood
up 24 separate programs and dedi-
cated teams around the globe to look
at these issues across businesses and
geographies to make sure we are
appropriately and consistently man-
aging the associated risks. They
include matters like Anti-Money
Laundering (AML), Basel implemen-
tation and how we evaluate new
business initiatives. Oversight of our
tens of thousands of vendors across
our front and back oces is another
example of a process we re-evaluated,
so that across our company, we man-
age these relationships and their
associated risks to a common set of
highly developed standards. We
report on these programs regularly
to our Board of Directors.
We pay close attention to our regula-
tory environment, not only to make
sure we behave in ways consistent
with the spirit as well as the letter of
the rules but to anticipate the evolv-
ing regulatory agenda. I personally
meet with our primary regulators at
least twice a month to make sure we
as a company understand their
expectations and fully address them.
Technology drives the experience of
our clients and customers and our
risk and controls management
Technology fuels almost every aspect
of this company and is a core part of
our value proposition to clients and
customers. Over the past five years,
the firm has invested 8% - 9% of its
annual revenue to fund our global
technology capabilities. This is one of
our largest investments as a company.
Technology enables our business
growth, supports our worldwide oper-
ations, helps us build stronger con-
trols and meet regulatory require-
ments, enhances our productivity and
eciency, and, most important, pro-
tects the safety of our clients’ assets.
The scale of our businesses contin-
ues to expand. Information Technol-
ogy (IT) supports 300,000 desktops,
58,000 servers in 32 data centers,
26,000 databases and 7,250 business
applications. Our global telecommu-
nications network connects our pres-
ence in 60 countries along with our
5,600 Chase branches and 19,000
ATMs. Technology in our Consumer
business supports 30+ million cus-
tomers via our digital platform and
15+ million customers using our
innovative mobile capabilities. In our
Corporate & Investment Bank (CIB),
we process up to $4 trillion of U.S.
dollar payments daily.